Best Retirement Plans for the Self-Employed

If you’re self-employed or have a sideline business, your best retirement-savings options are a Simplified Employee Pension (SEP) or a solo 401(k) plan. In both cases, your contributions are tax-deductible and grow tax-deferred until you withdraw the money in retirement
With a SEP, you can contribute up to 20% of your net self-employment income (which is your business income minus half of your self-employment tax) up to a maximum of $49,000 for 2011 ($50,000 for 2012). A solo 401(k) has the same maximum contribution limits as a SEP, but you can stash away more money at lower income levels because you fund a solo 401(k) as both an employer and an employee.